Efforts to restore affordability in Canada’s housing market by the federal government will mainly focus on increasing supply, says Canada’s housing minister, as the government prepares to release plans in the coming weeks.
In an interview with BNN Bloomberg on Wednesday, Minister of Housing, Infrastructure, and Communities Sean Fraser said the federal government is “very mindful” of the supply and demand dynamics in the market at and wants to “avoid ginning up demand.” Fraser’s comments come ahead of the 2024 budget, which will be tabled on April 16. He says the government’s plans go against calls from certain stakeholder organizations to focus on the demand side of the issue, through programs designed to help people purchase homes rather than build new units.
“We think we can hit the right balance by focusing primarily on supply and advancing some measures that will make it easier to rent or buy a home. Not all of which come necessarily with great public expenditures. But those that involve significant public spending will disproportionately impact the supply side of the equation,” he said.
Fraser also highlighted that the federal government will release a plan to tackle the housing crisis ahead of the upcoming budget.
He said the plan will accomplish three main things;
- Building more homes to reduce the supply gap
- Ensuring the government advances the interests of those most vulnerable
- Making it easier to rent or buy a home in Canada.
“We’re going to advance a suite of policies. Some of which may scale up existing initiatives, some of which will involve brand new policies that will be rolled out over the next few weeks, culminating with the publication of a plan in advance of the federal budget,” Fraser said.
On Wednesday, Prime Minister Justin Trudeau said the upcoming budget will include allocating $15 billion more to an apartment construction loan program.
A day earlier the prime minister also announced that the budget will include a $6 billion infrastructure fund dictating provinces and territories implement certain housing policies to access funding.
James Orlando, director and senior economist at TD Economics, said in a report last month that new measures in the 2024 budget, beyond the previously announced pharmacy program, are “likely to be scant.”
He added that amid tight fiscal conditions “firepower” is likely being saved for “next year’s pre-election budget” but that the remaining focus would be on raising housing supply and addressing cost of living issues.
In February, research from the Canadian Imperial Bank of Commerce said the Canadian government is underestimating the number of new units needed to restore affordability by around 1.5 million homes.
Benjamin Tal, the Deputy chief economist at CIBC, said in the report that while Canada’s national housing agency asserts that the country needs 3.5 million extra new units by 2030 to restore affordability, the real number of new homes needed is around five million.
According to Tal, the discrepancy between the two figures stems from population figures that don’t properly include non-permanent residents.
With files from Bloomberg News and the Canadian Press.
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